Gold benefits from concern about second wave of Covid-19
The metal is firmer as investors turn to riskier assets amid worry about resurgence of coronavirus cases
Bengaluru — Gold gained on Wednesday as the concerns that a second wave of coronavirus infections may be emerging in many countries weighed on riskier assets.
Spot gold climbed 0.1% to $1,704.23/oz by 12.30am GMT. US gold futures gained 0.1% to $1,708.10.
Asian equities were set to pull back on the heightened concern about coronavirus infections and the timing for a vaccine, while top White House infectious disease expert said lifting of lockdowns could lead to additional outbreaks.
Chinese health authorities on Tuesday called for vigilance to be maintained against the virus as new clusters emerge, even though the peak of the epidemic has passed.
The dollar was on the defensive against its rivals as traders looked to Federal Reserve chair Jerome Powell’s speech amid rising speculation the US could one day adopt negative interest rates.
Democrats in the US House of Representatives on Tuesday unveiled a $3-trillion-plus coronavirus relief package, only to see the measure flatly rejected by Senate Republicans.
Huge stimulus measures support gold as it is used as a hedge against inflation and currency debasement, while it is also seen as a safe-haven asset during times of economic and political uncertainties.
US businesses and households are going to need more fiscal support to get through what will likely be a longer period of recovery from the shutdown than initially expected, Federal Reserve policymakers said.
Underscoring the deeper economic effect of the epidemic, US consumer prices dropped by the most since the Great Recession in April, weighed down by a plunge in demand for petrol and services including airline travel.
The International Monetary Fund’s (IMF) MD said it was “very likely” the IMF would cut global growth forecasts further as the pandemic was hitting many economies harder than previously projected.
British retail spending plunged by nearly 20% in April as the government’s lockdown hammered the sector, and a broader measure of consumer spending tumbled by more than a third, surveys showed.
Highlighting investor appetite for bullion, SPDR Gold Trust holdings, the world’s largest gold-backed exchange-traded fund, rose 0.24% to 1,083.66 tonnes on Tuesday.
Palladium slipped 0.6% to $1,848.93/oz, while silver gained 0.6% to $15.49 and platinum rose 0.8% to $759.43.